Heat the olive oil in a sauté pan over medium heat, add the garlic and the onion and cook until softened, but not brown. Add the shrimp (complete with head and shell for flavor), season, then add the chili flakes and oregano, to taste. Once simmered, remove the pan from the heat and add the ouzo with caution. Cook for 1 minute and add wine to pan. Simmer for another 30 seconds and, using a slotted spoon, remove the shrimp from the pan and put on a plate. When the shrimp are cool enough to handle remove the heads and peel off the shells.

Add the crushed tomatoes and the olive paste to the pan and let it simmer for a few minutes. Return the shrimp to the pan, being careful not to overcook and toss in the sauce. Finally sprinkle the crumbled feta over the contents of the pan and melt it into the sauce by pushing it down with the back of a spoon.

Bon Appetit!

Food for thought

According to the prevalent economic view, i.e. monetarism, raising the reserves of private banks inevitably generates more loans (meaning that the banks begin to lend money to businesses or individuals) thus helping to get a depressed economy back on growth track. This is precisely that the European Central Bank and Mr Draghi have been doing by pumping billions of euros into the reserves of European banks. This is also what Mr Bernanke has been doing to U.S. banks (see chart). The diagram illustrates the surplus reserves of private financial institutions in the U.S. which seem to go high-crazy in 2008. Why is it so? And why is it that despite those reserves banks refuse to lend money to help the economy recover?

For two reasons. First it isn’t necessary for a private bank to have sufficient reserves to issue loans. (This was one of the major revelations of the Modern Monetary Theory.) Banks will lend if the customer is creditworthy, the business plan seems to be correct, the industry he’s involved in is generally promising, and the overall national economy is going well. If these factors are present, the bank will lend money no matter what they have in their reserves, be it mushrooms, condoms, or poppies. For banks to give out a loan there is no need for surplus reserve (“reserves” is merely a number that has little to do with the actual money that exists at any time in the safe) because they can always turn to the interbank lending market to find money. And if it cannot find the amount they need there, they will turn to the Central Bank, which will DEFINITELY hand them the money – because otherwise confidence in the banking sector will be lost and we all know what that means.

If the above criteria are not met, the banks will not proceed with a loan despite what politicians or people say because –and here’s the second and most important reason of all- quite frankly banking is not a charitable business. Banks lend for profit, i.e. they want their money back with interest. Since in a depressed economy prospects are grim keeping the money in their reserves seems to be the only option they have. Otherwise everyone (banks, businesses, individuals) will find themselves trapped in a vicious circle of debt trap.

Therefore, the solution is not for Mr Bernake or Mr Draghi to open the spigots but for the governments to finally begin a drastic budget Intervention – namely tax cuts, increasing reservation wages and pensions, launching major infrastructure projects etc.

And while this is a choice that the US can make (since they issue their own currency), it doesn’t seem to be the case for the Eurozone countries since the Maastricht Treaty has deprived them of such monetary policy tools.